A little bit of e-health for everyone, start-up or dyed-in-the-wool health care organisation

New York 15 January 2001An estimated number of 16.000 health care-oriented Web sites currently are fighting for space on the Internet. Companies are rushing to stake claim to e-health turf entering into complex strategic partnerships that link health care companies, the on-line media, and technology superpowers.

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The Internet has already been conquered by Web sites offering information about diseases, diet, and exercise, like the popular drkoop.com Inc., headed by former U.S. Surgeon General C. Everett Koop, and Medscape Inc., a medical journal and companion-consumer network that is 35 percent owned by CBS New Media.

Patient care is moving on-line too with specialised disease management sites allowing people with diabetes or cardiac patients to enter vital signs into personal Web pages and troubleshoot with nurses via e-mail. Meanwhile, many companies are pushing business-to-business applications, aimed at putting medical records on-line and helping doctors manage their mountains of paperwork and order supplies.

Besides start-up Web companies, the e-health industry also has caught the attention of traditional managed-care organisations which see better patient communication as well as potential cost-savings and efficiencies of putting services on-line.

Kaiser Permanente for example, recently launched an on-line consultation, scheduling and chat service which is available to its approximately 8 million members. The health maintenance organisation (HMO) estimates that about 61 percent of its members currently have Internet access.

Aetna U.S. Healthcare Inc. allows new members to enroll over the Internet, offers a "DocFind" service, and is moving toward processing more of its 200 million annual claims on-line. Aetna equally runs one of the most commonly visited health information sites, intelihealth.com, a joint venture with Johns Hopkins University which provides content to many other Web sites.

The nascent e-health industry has also attracted some of the biggest names in technology, including Microsoft Corporation, America Online Inc., Yahoo! Inc., and Intel Corporation, all of which have e-health related ventures and see a bright future ahead in a wired world of medicine. Health care is one of the largest sectors of the economy and these companies want, in one way or another, to be part of that.

The opinion of some of the experts is that with thousands of health-oriented Web sites out there, and only a few companies which have firmly established themselves in the marketplace, the industry is primed for consolidation.

Among the greatest names in the sector are two "connectivity" companies. The first one is the California-based medical billing and claims processing company Healtheon, founded by Netscape co-founder Jim Clark, and the second one is CareInsite network, headed by deal-maker Martin J. Wygod.

Other high-profile e-health companies include Drkoop.com, Medscape and on-line drugstores Drugstore.com Inc. and PlanetRX.com Inc. All of these companies went public this year.

Already, the biggest deal in the sector so far has been Healtheon's merger with privately held doctor-and-consumer portal WebMD Corporation, a stock swap worth an estimated $7.9 billion that is designed to create a "one-stop" health site.

CNN.com has a content partnership and a small equity stake in WebMD. CareInsite, meanwhile, struck a deal in September 2000 to link its network of doctors, insurers, pharmacies, and labs with America Online's estimated 18 million members.

The Internet is having a considerable impact in delivering some kinds of care to patients. In a recent survey of 1000 CIOs, conducted by Internet Health Care Magazine, 65 percent stated that their organisations had a Web presence whereas another 24 percent have one in development.

Among the most popular Web site features, 78 percent of sites offered some information about the organisation, 55 percent provided an on-line directory of physicians, 55 percent delivered e-mail contact, and 40 percent hosted patient education materials. Less frequently offered services involved health self-assessments; physician-referral transactions; physician access to health records; drug interaction guides; and reporting of test results.

The report from Forrester Research, which is titled "Sizing Healthcare E-commerce", predicts the Web will become the foundation for a new health care industry infrastructure which supports complex, multi-party transactions among consumers, providers, insurers, and medical suppliers. With 32 percent of on-line consumers already shopping for medical products on the Web, on-line health sales show no sign of slowing.

Forrester expects 8 percent of all retail health sales, $22 billion dollars, will move to the Internet by 2004. Prescription drugs will dominate the category with $15 billion in on-line sales as Web pharmacies, insurance carriers, and doctors address reimbursement and liability issues.

In addition to retail health sales, Forrester predicts $348 billion in business-to-business health care, which is 17 percent of the industry total, will move on-line by 2004. These efforts will be driven by the need to control costs, improve information flow, and gain transaction efficiency.

New intermediaries will arise to simplify the procurement of everything from drugs to capital equipment, capturing about $124 billion in revenues in the process. Meanwhile, insurance companies and HMOs will turn to the Web to improve claims efficiency, bringing $224 billion in claims onto the Internet by 2004.


Leslie Versweyveld

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